U.S. Session Forex Recap – Jan. 8, 2016

  • U.S. initial jobless claims at 277K vs. 271K forecast, 287K previous
  • Canadian Ivey PMI fell from 63.6 to 49.9 vs. 56.7 forecast
  • S&P 500 index closed 2.37% lower, Nasdaq down by 3.03%

The risk-off vibes were still present in the financial markets but the safe-haven U.S. dollar had a mixed forex performance. What’s up with that?!

Major Events:

U.S. equity bloodbath – Another day in the red! Stock indices were feeling the pain of risk aversion, as investors dumped their higher-yielding and riskier holdings in favor of safe-haven assets. The equity selloff actually started earlier in the day when China’s “circuit breakers” spurred additional uncertainty and cast dark clouds on the Asian and European markets.

It doesn’t help that the Fed has already started its tightening cycle, which means that U.S. companies can no longer rely on cheap borrowing costs to shore up their performance.

Downbeat Canadian Ivey PMI – Uh oh,  it looks like the Great White North is hurting from the recent slump in oil prices, as the Ivey PMI crashed from 63.6 to 49.9. Analysts had been expecting to see a significant drop to 56.7, which would’ve indicated a slower pace of industry growth, so jaws dropped when the actual results revealed that the manufacturing sector contracted in December. Do I smell another BOC rate cut cookin’?

Major Currency Movers:

JPY – The Japanese yen continued to cash in on the current risk-off environment, outpacing the U.S. dollar in the safe-haven forex race.

USD/JPY fell by an additional 50 pips to the 117.50 minor psychological support, GBP/JPY moved all the way down to a low of 170.71 before bouncing back up, AUD/JPY dipped to a low of 82.01 then retreated to the 83.00 levels, and NZD/JPY tested support at 78.00.

EUR – Surprisingly, the euro managed to advance against its forex rivals, buoyed by a couple of stronger than expected releases from the euro zone earlier in the day.

EUR/USD popped up to a high of 1.0938, EUR/JPY kept up its climb until the 128.00 levels, EUR/GBP is attempting to break past the resistance around .7400, and EUR/AUD spiked to a high of 1.5631.

Watch Out For:

  • 12:30 am GMT: Australian retail sales (0.4% expected, 0.6% previous)
  • 5:00 am GMT: Japanese leading indicators

See more:

Asian Session Recap

London Session Recap

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